Is your business paying enough VAT?
Any business with annual sales of more than £85,000 must be registered for VAT.
![](https://cdn.mos.cms.futurecdn.net/7DoNd6KvPPFRQdNfWaQn5f-415-80.jpg)
If you’re not on top of your value-added tax (VAT) accounting, you should make it a new year’s resolution to do better – and do so quickly. HM Revenue & Customs is cracking down on small businesses that don’t get it right.
Any business with annual sales of more than £85,000 must be registered for VAT, charging its customers the tax and passing the proceeds on to HMRC.
But data from the tax-investigation firm PFP suggests small businesses had to find an extra £1.7bn last year following HMRC’s investigations into the amount of VAT they paid in the 2017-2018 financial year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The tax authority has pledged to continue with its more aggressive stance towards VAT collection. Various estimates have suggested that the VAT gap – the difference between what businesses should be paying and what is actually being collected – has risen to a record high.
That has prompted HMRC to appoint specialist teams to look at industries associated with poor VAT management. These include trades where customers typically pay in cash, such as fast-food outlets.
Online retailers, including small businesses selling on marketplaces such as Amazon and eBay, are also a target. In practice, however, any business could come under scrutiny from HMRC, so make sure you’re paying the right amount.
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.
-
Skipton launches a retirement bond with monthly income – is it any good?
The building society has launched a new three-year fixed-rate bond for those aged 66 and over. Can it boost your retirement income?
By Katie Williams Published
-
Pensions: 140,000 pensioners to be hit by surprise tax demand
Tens of thousands of pensioners will be written to over the summer because their pensions have gone above the frozen income tax thresholds
By Chris Newlands Published